And what is the tax position? It is one thing for a bank to write down a loan in its accounts. But telling people that they no longer owe money is a gift. It should be subject to CAT. Or maybe it is CGT. I think a debt being discharged for less than its face value is specifically mentioned in the Tax Acts as a chargeable capital gain.He does sum up the moral problem well though - giving 10s or 100s of thousands of taxpayers money to someone is the other side of the writing down mortgages that can never be paid off.
And what is the tax position? It is one thing for a bank to write down a loan in its accounts. But telling people that they no longer owe money is a gift. It should be subject to CAT. Or maybe it is CGT. I think a debt being discharged for less than its face value is specifically mentioned in the Tax Acts as a chargeable capital gain.
There was a nugget in MK's talk which amazingly has got no coverage at all. Maybe it is because he couched it in a form which would escape libel. But he more or less insinuated that AIB being a state owned bank which is now writing down loans will do so on the basis of political patronage. "If you went to the same school as the son of..." was how I think the insinuation went.
If this is happening it is totally outrageous. Noonan thinks MK should be taken seriously. Political patronage in loan write downs by a state owned bank is firmly within the watch of the Department of Finance and Noonan himself. Instead of advising others to listen to MK, Noonan should be talking directly to him to ascertain what basis he has for this claim.
AIB, Bank of Ireland and PTSB have issued about €150 billion of loans to customers in Ireland across all areas: mortgages; SMEs, corporate, property and consumer. Of these, around €60 billion are non-performing. However, over the past few years the banks have made over €30 billion of provisions against these loans to cover likely losses. They were required to further increase this after the Balance Sheet Assessment, which drove some of the losses announced by the banks in their recent 2013 annual reports.
...
The Irish banks are in a strong position going into the ECB's stress tests and will pass them. This is not because their assets are performing well; it is because they have provided for the likely losses on their non-performing loans. It is possible that the next few years will see the Irish banks engage in reverse-provisioning, that is removing the provisions for losses that did not materialise.
Between these three articles and the one today, he has made many precise, measurable forecasts.
Like any other economist, he has got around half of them right and half of them wrong.
He is not special.
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